$4.1 billion pulled from
U.S.-based taxable mutual bond funds during week: Lipper
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[December 03, 2016]
By Trevor Hunnicutt
NEW YORK (Reuters) - Investors pulled $4.1
billion from U.S.-based taxable-bond mutual funds, the most since June,
as a bond selloff forced interest rates higher and rattled investors,
Lipper data for the latest week showed on Thursday.
"Investors are pulling the trigger and are starting, maybe, the rotation
out of bond funds," said Tom Roseen, head of research services for
Thomson Reuters Lipper.
Municipal bond funds continued to be punished as well, losing $2.1
billion to redemptions. Investment-grade corporate bonds posted $1.3
billion in outflows during the seven days through Nov. 30.
Both categories of bonds had been popular this year before rates started
rising along with expectations that U.S. President-elect Donald Trump
could push policies that stoke inflation. In addition, the Federal
Reserve is widely expected to raise interest rates later this month.
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The $4.1 billion in bond mutual fund outflows was partially offset by
$1.1 billion in opportunistic taxable-bond buying by exchange-traded
funds, the Lipper data showed.
High-yield "junk" bond funds took in $342 million, while bonds that
invest inflation-protected government debt took in $156 million.
Loan-participation funds, invested in bonds that pay out more when rates
rise, took in $339 million and delivered a third straight week of
positive performance.
"They're being selective," said Roseen.
Investors extended a streak of mostly withdrawals for European funds
this year, pulling $335 million in the latest week, according to the
data. On Sunday, Italy faces a constitutional reform referendum that
could lead to the resignation of Prime Minister Matteo Renzi, trigger
renewed turmoil in the country's battered banking sector, and push the
euro zone back toward the edge of crisis.
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U.S. dollar notes are seen in this November 7, 2016 picture
illustration. Picture taken November 7. REUTERS/Dado
Ruvic/Illustration
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But Japanese stock funds in the United States, helped by rising stocks and a
falling yen, pulled in $158 million in a third straight week of inflows, Lipper
said.
Fund investors appeared to bet against a deal by oil producers to stabilize
prices, Roseen said, as they pulled $450 million from energy-sector funds.
That deal came through on Wednesday as the Organization of the Petroleum
Exporting Countries agreed to its first oil output reduction since 2008.
Overall, stock funds in the United States posted $961 million in outflows during
the week, Lipper said, with mutual fund selling partially offset by ETF inflows.
Relatively low-risk money-market funds took in $10.6 billion.
(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Leslie Adler)
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